Farm Tender

Weekly Agribusiness News Recap

This article is bought to you by Pepperton and Forest Springs Merinos.

By Georgia Devenish - Agricultural Research Analyst at JLL

Agribusiness

Perth-based agribusiness investment company, Alterra, has executed a local partner agreement with Western Australian producer, French's Group. French's Group is a family-owned company that owns over 32,000 trees that produce more than 5.8 million avocados per annum. It also holds a shareholding in Advance Packing and Marketing Services. Under the agreement, French's Group will provide Alterra with local partner services including assistance with origination and assessment of investment opportunities, localised production experience and technical support in the Peel, South West and Great Southern regions of Western Australia for a three-year period.

As part of the deal, Alterra will issue French's Group with 2 million performance rights. The first 1 million rights will vest upon the execution of a binding term sheet for the development or purchase of 50 hectares of avocados. The remaining rights will vest upon the execution of a binding term sheet for the development or purchase of an additional 150 hectares of avocados.

In May 2019 it was reported that Alterra, newly de-merged from it's Carbon Conscious business, was looking to capture strong institutional investor demand for WA agriculture. Alterra was particularly interested in developing investment-grade agriculture assets by transforming under-utilised Western Australian land. Managing director, Oliver Barnes, had said, "Alterra is currently seeing cattle and potato farms that have under-utilised water assets. By securing and establishing avocado orchards on these properties we have the potential to increase the returns per hectare by at least tenfold and create an attractive proposition for institutional investors."

Wimpak's 25 shareholders have agreed to sell the pulse accumulation, cleaning and packing plant. The Minyip grain packer has been acquired by international commodity group, Export Trading Group (ETG). The purchase is the Dubai multinational trader's first asset investment in Australia. The company has other plants in India, Africa, Canada, Bangladesh and the United Arab Emirates.

Wimpak was established in 1998 by 10 Wimmera farmers. In recent year the business has focused on expanding its capacity. Wimpak general manager, James French, said the company employs nine staff and packed 55,000 tonnes of pulses two years ago.

Coastal cattle property, 'Exmoor Station' will be the site of a major aquaculture operations to be developed by new owner, Tassal Group. Australia's largest producer of Tasmanian grown Atlantic salmon and a major seafood processor and exporter recently acquired the 7,012 hectare property for $28 million from the estate of Bruno Giaiotti.

The Tassal Group has been busy improving its production capacity in Queensland and northern New South Wales over the last 18 months. Tassal purchased three prawn farms at Mission Beach in Far North Queensland and Yamba in New South Wales for $31.9 million in September last year. In January 2019, the company announced it was rehabilitating and developing the Proserpine Prawn Farm, which is acquired in 2018.

Yinmore Wines Pty Ltd has acquired the 'Knappstein' winemaking facility in the Clare Valley from Accolade Wines. The sale of 'Knappstein' comes as part of Accolade's broader review of its global operational footprint that has occurred in the interim since the company was sold to The Carlyle Group last year for $1 billion. Yinmore Wines is an Australian incorporated proprietary company and is part of the China-based Yunnan Yinmore Group Co. Ltd.

Select Harvests has announced it is forecasting a crop volume of between 22,200 and 22,500 tonnes with orchard yields above industry standards. Investment in frost fans and the focus on high-performance horticulture programs were cited by managing director, Paul Thompson, as key reasons for the strong performance. The company's almond price is forecast to be $8.60 to $8.70 per kilogram.

Trade

China has lifted tariffs on eight categories of Australian imported beef after safeguard provision implemented under the China-Australia Free Trade Agreement (ChAFTA) were triggered. Beef exports to China have been up substantially during the first seven months of 2019, reaching the yearly import quota four months ahead of schedule. The China quota level actually triggered last year for the first time, but it happened during mid-December, meaning the higher tariff applied for only a couple of weeks. At the time the FTA agreement was signed in 2015, it was not anticipated that Australian beef trade into China would grow as rapidly as it has. From August 17 China has doubled the quota applying to Australian beef from 6 percent to 12 percent. The higher tariff rate applies for the remainder of the 2019 calendar year.

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Other

The Marshall Liberal Government has announced that from next season South Australian farmers will be given the choice to plant Genetically Modified (GM) food crops. The repeal of the moratorium comes after a high-level independent review found the moratorium had cost South Australian grain growers at least $33 million since 2004. The bane was due to continue to 2025. Kangaroo Island will retain the moratorium. The announcement comes only two weeks after Tasmania announced it would extend its ban on GMs for another ten years.

Approximately 1,500 flood victims in North and North West Queensland have been the recipients of more than $90 million in recovery grants following the North and Far North Queensland Monsoon Trough in January and February. The majority of grants had been paid to primary producers. Queensland Rural and Industry Development Authority (QRIDA) spokesperson, Brendan Egan, said, "The majority of applications by number and value were paid to producers in Burdekin (383 approvals for $14.8 million), Hinchinbrook (320 approvals for $15.1 million) and McKinlay (162 approvals for $11.9 million) local government areas." The application deadline for Special Disaster Assistance Recovery Grants administered by QRIDA on behalf of the Queensland and Australian Governments, have been extended to November 29.

The CSIRO has announced a new business to assist mining and agricultural companies to tackle declining community trust and to help manage their social licences to operate. Voconiq will use a science-based approach to gain insights into public sentiment with a methodology which involves community engagement, community surveys, data collection, analysis and reporting in a clear framework that companies can proactively respond to. In the agricultural sector, Voconiq has recently secured contracts with AgriFutures Australia and LiveCorp.

Water

Mangoes, avocados, citrus, papaya and banana are collectively worth approximately $500 million to the Tablelands region but growers fear continued growth of the horticulture sector in the region is being threatened. The Mareeba Dimbulah Irrigation Area (MDIA) provides significant irrigation water resources to these industries in the Tablelands region. At a recent Mareeba Chamber of Commerce meeting, industry leaders suggested that without access to additional, reliable and affordable water growth would be stifled. Mareeba Chamber of Commerce president, Joe Moro, pointed to the fact that the current modernisation of the existing MDIA scheme would produce an additional 8,000 megalitres of water, but that other options needed to be considered as part of a holistic approach to answering the region's future water needs.

Animal Protein

Cattle on feed for the April - June 2019 quarter has reached new heights. According to the latest Australian Lot Feeders' Association (ALFA) and Meat and Livestock Australia (MLA) survey, 1,147,393 head were fed over the June quarter representing a 0.2 percent increase on the previous quarter. This was largely expected by the industry as prolonged poor conditions continue and accelerated destocking rates remain evident in the market.

MLA's Senior Market Analyst, Adam Cheetham, said, "Grain fed exports for the 2018/19 fiscal year totalled 311,986 tonnes shipped weight, easily surpassing the record established in the 2017/18 fiscal year. For the June quarter major volume gains were experienced into China, up 40 percent, and Korea, up 9 percent, from year-ago levels," he said. ALFA President, Bryce Camm, said, "Cattle on feed has consistently been above 1 million head for the last 18 months reflecting the important role feedlots play in managing climate variability and delivering high-quality beef to our global customers."

Dairy

The Weekly Times has reported that Fonterra Australia is offering $7.60 per kilogram of milk solids (MS) to select dairy farmers; an 80 cents premium on the $6.80 per kilogram MS received by majority of its suppliers. Dairy farmers supplying to the company under the Vic Fresh contracts in northern and western Victoria are set to benefit from the higher price which would apply in the second half of the season. The highly competitive atmosphere has prompted the move with other processors in northern Victoria offering up to $7.48 per kilogram MS.

Wool

The Eastern Market Indicator fell to its lowest point since September 2017. After 9.7 percent decline to 1,513 cents per kilogram last week the benchmark stands 603 cents per kilogram below year-on-year levels. Wool growers were reluctant to sell as a result with 16.7 percent of the bales offered nationally withdrawn before sale. A further 35.8 percent were passed in. A slowing of Chinese business and the US-China trade war were cited by Australian Wool Network Victorian manager, Kevin Shelley, as the cause for the price drop.

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